J.P. MORGAN'S STRONG EARNINGS, AT WHAT COST?

J. P. Morgan posted surprisingly strong earnings, beating out most analyst's estimates. However, as a former credit card holder, I would have to question their business tactics, along with several other bank card issuers. I am a former customer because the interest on my credit card accounts soared to astronomical rates, even though my income and credit score remained basically the same. I also had a perfect credit record with both accounts, always paid over the minimum, never went over the limit and never made a late payment. None of this mattered to them apparently. Because when I called to inquire about the rate increase, they basically told me I could accept the increase or cancel my card. I cancelled both cards and will never do business with them again.

In all fairness, they are not the only card issuers to employ these type of tactics and I've eliminated most of my credit card accounts for that very reason. Kudos to Capital One and Juniper for showing some consideration for good customers! They are the only two companies whose credit cards I continue to carry.

So when I say "earnings at what cost", I'd like to point out that while these companies may increase earnings in the short term by gouging customers who are unable to pay off their cards and are forced to pay exorbitant interest rates, in the long term these same companies will hurt future earnings by losing business from some of their better customers. I sure wouldn't rush to invest any of my money in any of these businesses.

It's All About Earnings

About half the Dow 30 and a quarter of the S&P 500 report in the week ahead. Analysts expect the majority of these companies to continue to beat expectations. Of the 61 S&P companies that reported so far, 79 percent have reported better than expected earnings. The Dow gained 1.3 percent for the week, ending at 9,995, just shy of the 10,000 mile marker it reached on Wednesday. The S&P 500 scored a 1.5 percent gain, ending the week at 1,087. The dollar lost about 1 percent against the euro and the same against a basket of currencies.

Stocks declined Friday as disappointing results from Bank of America and General Electric eclipsed strong results from big techs. After two straight finishes above 10,000, the Dow Jones Industrial Average shed 67.03, or 0.7 percent, finishing at 9,995.91. Still, for the week, the blue-chip index gained more than 100 points, or 1.3 percent. This is the second straight week the Dow is up — it's gained more than 5 percent in that time. Shares of both GE and Bank of America lost more than 4 percent.

Pfizer, which reports Tuesday, expects higher earnings on slightly lower revenue, while Merck (MRK: 33.22, -0.09, -0.27%), which reports Thursday, is likely to post profit and revenue increases. Eli Lilly & Co. (LLY: 34.42, -0.09, -0.26%), reporting Wednesday, is expected to return to the black after last year's results were hurt by legal settlements. Economists predict small increases in September building permits and housing starts from the previous month, continuing the general trend since spring. That report is due Tuesday, a day after the National Association of Home Builders releases its October housing market index, which reflects builders' confidence in the market. Next Friday, the National Association of Realtors reports on September existing-home sales, which are forecast to grow 5.5% from a month earlier. Sales dropped in August after rising since April.

The government will issue the September Producer Price Index, which measures wholesale inflation, on Tuesday. Predictions are for a 0.1% rise, after a bigger-than-expected 1.7% increase in August. On Wednesday, the Federal Reserve will release its Beige Book, which provides information about economic activity in various regions. The nonprofit Conference Board's September index of leading indicators is out Thursday.

(I currently own shares of Merck and Pfizer so I'm hoping for good news from both.)